SUMMARY
The retrenchments were carried out as part of routine personnel optimisation and organisational streamlining: Xiaomi
There was no immediate clarity on the number of Indian employees impacted by the layoffs
From falling share in smartphone market to intense government scrutiny, Xiaomi’s India operations have been marred by a slew of problems
Chinese smartphone manufacturer Xiaomi has trimmed nearly 10% of its global workforce as part of a ‘personnel optimisation’ drive.
“Xiaomi recently implemented routine personnel optimization and organizational streamlining, with affected parties totalling less than 10% of total workforce. Those affected have been compensated in compliance with local regulations,” Xiaomi said in a statement.
However, there was no immediate clarity on the number of Indian employees impacted by the layoffs.
The development comes amidst reports that the Chinese smartphone manufacturer was looking to reduce close to 15% of its global workforce as macroeconomic pressures hit the company’s bottomline.
In the quarter ended September 2022, the company employed 35,314 workers globally, of which more than 32,000 are based out of China.
Earlier in August, the original equipment manufacturer (OEM) fired 900 employees across the globe.
Xiaomi’s Many Issues In India
The smartphone manufacturer has been marred by a slew of problems in India. Besides the macroeconomic pressures, the company has also been bogged down by slowing sales.
Xiaomi’s share in the Indian smartphone market fell to 21% in the third quarter (Q3) of calendar year 2022 (CY22) from 23% in the corresponding quarter a year ago.
The issue has been further compounded by falling Indian smartphone shipments, which declined 11% year-on-year (YoY) to 45 Mn units in the quarter ended September 2022. Despite this, Xiaomi continues to lead the Indian smartphone market. It continues to be the highest selling smartphone brand in the country, having shipped more than 72 Mn units in the past nine years.
The OEM has also been weighed down by the regulatory scrutiny around Chinese smartphone makers in the country. Xiaomi is under the lens for allegedly remitting an amount of INR 5,551.27 Cr unauthorisedly in the guise of royalty to three entities.
The company’s offices were raided and many senior officials were questioned by authorities in connection with the investigation. In its plea before the Karnataka High Court, the smartphone maker contended that the FEMA probe would have ‘a far reaching effect’ on its business and may lead to a ‘civil death’.
Earlier in September, the competent authority confirmed the seizure of INR 5,551.27 Cr worth of funds in the probe which also affected the cash flows at the Indian arm of the smartphone giant. Xiaomi is also under the scanner for allegedly providing misleading information to Deutsche Bank officials while remitting the money abroad.
Besides, the Income Tax Department also blocked the Chinese phone maker’s fixed deposits (FDs) worth INR 3,700 Cr in February. However, the Karnataka High Court recently lifted the embargo, providing a much needed relief to the company.
As a result, the company has taken many steps to cut corners and consolidate its businesses in the country. In October, the smartphone maker delisted its digital payment app Mi Pay and digital lending app Mi Credit from Play Store as it ramped up focus on ‘core business’.
Later, it also emerged that the Chinese tech major was looking to divest its stakes in multiple Indian companies and exit the country’s startup ecosystem.
With the layoffs, Xiaomi has joined the long list of global tech companies, including Meta and Amazon, which have fired employees.
Back home, the startup ecosystem has also been hit hard by the funding winter and the adverse macroeconomic conditions. As per Inc42 data, Indian startups have so far fired more than 18,000 in 2022 so far.
